What to Expect for Retail Media in 2025: Q&A

This article is part of ADWEEK's Ultimate Guide to Retail Media, sponsored by Walmart Connect Retailers are gearing up for a big year. In 2024, retailers continued to stand up ad businesses with new formats like audio and deals with adtech companies to sell targeted ads across the web. The stakes are higher for 2025 with retail media expected to make $166 billion globally, up from $140 billion in 2024, according to Emarketer. Going into next year, retailers are expanding their in-store ads and finding new ad formats like video to run on their ecommerce websites, according to independent retail media analyst Andrew Lipsman. Lipsman also expects retail media to steal TV ad dollars—though measuring retail media using the same metrics used to signify success in TV advertising is still a challenge. ADWEEK spoke with independent Lipsman about what to expect in 2025. This conversation has been edited for clarity and brevity. ADWEEK: What is the state of retail media today? Andrew Lipsman: The space continues to grow strongly overall, but it is skewed towards the performance of Amazon and Walmart, which make up some 85% of the market. The next tier of retailers has seen very uneven growth. What's next is other brick-and-mortar retailers starting to follow Walmart's version of retail media and using that to scale their businesses. They all need to reassess, tweak the model, and figure out what takes them to the next stage of growth. Brands also need to significantly evolve their thinking. Retail media has been the domain of performance teams. It needs to evolve to training the national media and brand teams on retail media. How are retailers approaching in-store ads going into 2025? One of the biggest issues is that a lot of brands don’t have anyone responsible for in-store retail media. That channel is full of potential but has been under-monetized. Two factors hold retailers back: customer experience and capital. Capital meaning not wanting to spend a lot on digital screens and infrastructure. And customer experience is the most important thing—they don’t want anything that’s going to interrupt the in-store experience. Eighty-five percent of retail sales are still in stores, and that’s where you have the chance to influence people at the point of purchase. Those ad units should be the most impactful. How else will retailers tweak their ad businesses? With the near-term growth demands, the easiest money is still on-site ads, and there’s a lot of untapped opportunity. A lot of retailers don’t have comparable ad units on their sites. Retailers need to tweak their existing ecommerce experience, amp up the rich media formats, sponsored brands, and sponsored brand videos. Retailers also need to get their search ad relevance up to par. Machine learning and better optimization can unlock a lot of monetization. More retailers are also investing in offsite ads. How do you see those partnerships changing in 2025? A lot of these partnerships never get past the headlines. There’s a lot that has to happen behind the scenes with connecting the pipes, making the data flow, and enabling the advertising opportunity. It also requires alignment between sales and commercial teams. Some partnerships scale and some do not. There’s going to be a rationalization happening in terms of prioritizing partnerships. There’s a cost to these relationships if you sink a lot of time and resources into it and it doesn’t materialize into new revenue. Where is new money for retail media coming from? Increasingly, I believe that it should come out of national ad budgets, specifically TV. It’s a mass-reach medium that can influence consumers. It does a lot of what TV has historically done but linear TV has a harder time reaching 18 to 49-year-olds. There are also plenty of areas of digital advertising that are arguably over-invested: the open web and platforms. How are retailers and advertisers thinking about measurement for 2025? If this is going to be a scaled ad market, it needs a strong measurement foundation. With in-store, there are a lot of unique dynamics that are required. My belief is we need a version of the Nielsen TV ratings for in-store media and the ability to measure unduplicated reach. In ecommerce, it’s tougher to come to a consensus about incrementality. There are a lot of different incrementality measurement providers. They have different methodologies, you'll never get them to agree, and most would say that theirs is the best way to measure. If return on ad spend is a wrong and misleading metric, let’s move towards any credible incrementality measurement to get closer to the truth. Measurement is never about perfection—it’s about getting closer to understand[ing] the real impacts. There have also been several non-retail ad networks launched this year like JPMorgan Chase, United, and PayPal. How will those impact retail media budgets? I’m taking a wait-and-see approach. The positive is that a lot of them reach high-value audiences—for example, business travelers. They also have valuable first-party data. The question is: How far along are these, and do they have the talent needed to scale these into the opportunities that they’re capable of being? I still think they're probably a few years away, but there's certainly a lot of potential there. Are there any other trends you’re watching? I’m thinking about experiential retail media. I think of it first as product sampling—it is the highest and most effective type of media because it can drive not only purchases immediately but also long-term value if you can convert a new buyer of a brand. I also see the evolution of creators. I think they will increasingly play a hand in helping different media break through. I think of creators as anyone who has relevance with an audience up to celebrities. You can easily see chefs, for example, being part of experiences in grocery stores. You could see athletes being incorporated into sporting goods stores, or beauty influencers integrated into cosmetics.

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What to Expect for Retail Media in 2025

Retailers will pitch more in-store ads and tweak ecommerce sites

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